Carpe Diem, Economics, Energy and the Environment

Energy fact of the day: Within months, the US will have three oil fields producing more than 1 million barrels per day

oil

Last week the Energy Information Administration (EIA) released its first publication of a new monthly report on US oil and gas production. According to the EIA:

Recent U.S. production growth has centered largely in a few key regions and has been driven by advances in the application of horizontal drilling and hydraulic fracturing technologies. Given the importance of drilling productivity trends as a driver for future domestic production, EIA has been developing new approaches to assess the productivity of drilling operations.

The new monthly Drilling Productivity Report (DPR) to provide region-specific insights into rig efficiency, new well productivity, decline rates at previously existing wells, and overall production trends. The DPR information will initially cover six regions (see map below). In 2011-12, these six regions accounted for 90% of domestic oil production growth and virtually all domestic natural gas production growth.

mapHere are some highlights of the EIA’s first Drilling Productivity Report:

1. Very quietly and apparently without any media attention, oil production in the Permian Basin surpassed one million barrels per day (bpd) in August 2011 (see chart above), giving the oil field in West Texas the distinction of joining an elite group of only six other super-giant oil fields globally to ever produce more than a million barrels of oil per day at their peak: Ghawar (Saudi Arabia), Burgan (Kuwait), Cantarell (Mexico), and Daqing (China) in recent years; and Samotlor (Russia) and Kirkuk (Iraq) in the 1970s and 1980s.

2. In August of this year, daily oil production in the shale-rich oil fields in the Eagle Ford area topped one million barrels for the first time (see chart above), and the South-Central Texas oil field joined the Permian Basin in the exclusive group of now only eight super-giant oil fields in the world that have ever produced oil at that level. Based on EIA estimates, Eagle Ford oil production in November will reach 1.092 million bpd, a 50% increase over the same month last year, and almost double the oil production just 18 months ago in May 2012 (557,502 bpd).

3. Oil production has surged so dramatically in the Eagle Ford area in recent years that it surpassed production in the North Dakota Bakken region in January of this year for the first time, and is expected to out-produce the Bakken in November by 13.7% (see chart above).

4. In November, the EIA estimates that the Bakken oil fields will produce almost 961,00 bpd, which suggests that by January 2014, North Dakota’s prolific oil-producing region will become the ninth super-giant oil field in the world to produce more than one million bpd.

5. In June (most recent month for international oil production data), the three most prolific US oil fields – Permian Basin, Eagle Ford, and Bakken – together produced more than 3.1 million bpd. To put that amount of oil into perspective, that’s almost as much oil produced throughout all of Canada in June at 3.66 million bpd, and slightly more oil than Iraq produced in June at 3.1 million bpd. If those three US oil fields were considered as a separate country, the Permian Basin-Eagle Ford-Bakken oil fields would have been the seventh largest crude oil-producing nation in the world in June.

MP: More good news and several important milestones for America’s booming energy sector from the latest EIA report, especially the fact that within just a few months the US will have three super-giant oil fields producing more than one million barrels of crude oil ever day. The Permian Basin, Eagle Ford and Bakken oil fields have become world-class producers of crude oil. And the shale-rich fields are not only pumping oil, but they are also pumping thousands of “shovel-ready” high-paying jobs into the local economies, pumping millions of dollars into local communities through the royalty payments made to hundreds of local farmers and landowners in the oil patches, and generally pumping energy-based wealth and prosperity into many small towns in Texas and North Dakota. Without the Great American Energy Boom and the economic stimulus it has provided, the US economy and job growth would be much weaker today, and the jobless rate would likely be higher. Thanks to America’s shale revolution, the US economy has been energized and the country’s economic future looks much, much brighter.

17 thoughts on “Energy fact of the day: Within months, the US will have three oil fields producing more than 1 million barrels per day

  1. One thing I’ve seen discussed very little in relation to the US boom in onshore unconventionals (“shale” oil and gas) is the extent to which the key enabler isn’t technology (everyone has access to the technology), nor is it the geology (similar formations exist elsewhere in the world). It’s property rights.

    The US is very nearly unique in that individual land owners also own the underlying mineral rights. This has allowed basins like the Permian, Bakken and Eagle Ford to be developed in a bottom-up, Hayekian manner, rather than in a top-down manner by a large national oil company.

    There is certainly a lesson in this.

    • This actually works in two ways, one property owners benefit, and secondly since the local community benefits from the property taxes generated on the leases, there is much less local opposition as compared with where the revenues go only to the central government and there is no benefit to local folks. In many countries in Europe the folks where the shale lies see drilling as just a way to make life rougher (traffic, destroyed roads, if a boom happens runaway housing prices…) They don’t see any direct benefit to themselves or their community so they oppose it because there is no local upside and great local downside.

    • Excellent point. I’m up in Canada where most the mineral rights are held by the Crown and you really see the difference in pace of development. Hard to blame the landowners though because if you’re not getting a piece of the action its hard to accept a pumpjack and perhaps a compressor a few hundred yards from your house. What they’re paid in yearly surface lease rentals doesn’t come close to justifying the hassle

  2. I thought the Permian was growing faster with higher production per well then it is — but it is about 95% oil with a little nat gas and liquids.

  3. Yeah, but if you listened to the conference calls and read the 10-Ks on the Vangle Group as I had, You’d all realize Mr. Vangle Wangle’s blabbermouthing was as real and sustainable as that doom day cult known as the Oil Drum.

  4. And we spent or incurred liabilities of $3 trillion in Iraq for…oil? Now, there are 3.7 million citizens getting monthly disability checks…from the VA.
    Is the federal government ever the answer, to domestic or foreign “problems” ?

    • Benji, get off it. Go enjoy your day of freedom and liberty, fought for on your behalf, against enemies eager to deploy their armaments to do you harm on behalf of blood thirsty potentates.

    • Hey you finally upped the number, good going, at least you are paying attention now.

      Now if we could get those folks off of SSA disability as well, close down HUD and the Department of Education, we would have only half the deficit.

        • Yeah, but I still thing DOEd and Hud could be closed, save 60 billion or so, and then cut the Disability in half, save another 60 billion or so. And even Benji’s favorite program Vet disabily could use a bit of trimming, say 5 billion there.

          But agreed it is the overpromised Medicare, and the theft of funds from SSA that are really going to kill us.

        • Doug

          So, let’s ignore, just for the moment, the moral issue of forcing redistribution of income from current workers trying to build wealth to retired workers who have already done so.

          What effect do you think adding 10.6% to the cost of labor would have on businesses and overall economic activity in the US?

          Or conversely what do do you imagine the effect of reducing workers total incomes by 10.6% would have on businesses and overall economic activity in the US?

          As you are an MBA in economics I’m sure you’re aware of the dishonest trick being played on workers by claiming that employers pay half of FICA taxes, when in reality those taxes are all part of the overall cost of labor. Do you think current workers will be OK with paying 25.8% of their earnings to retirees?

          • The blog is a bit ‘tongue and cheek’ to show how out of whack the entitlement system is. Medicare also had a trust fund that’s degenerated into a “pay as you go” arrangement but it’s actually “not paying as we go.” The blog is an effort to start a conversation about benefit levels and how ridiculously high payroll taxes would have to rise to pay them both now and the future. Obviously benefit levels will have to drop. Someone’s got to say it at some point!! Right now, everyone have their heads in the sand. Thanks!!

          • Doug

            Well, you got me. The blog looks serious, and I suspect many folks would agree wholeheartedly that FICA contributions should be raised to cover benefits.

            I would like to see those programs phased out, replaced by voluntary retirement and medical savings plans, but I don’t think that’s going to happen.

  5. Citizen Buddy and Marque 2-

    I pay taxes for my mercenary military. Remember? No draft, no volunteers. A professional military (and expensive too).

    If you think our military/NSA/VA has preserved our freedoms, then thank me and other taxpayers and productive citizens and businesses. Economically speaking, militaries the world over are parasites. We taxpayers foot the bill.

    Marque2-

    I would be happy to eliminate the USDA, HUD, VA, Commerce, Education and Labor Departments. Maybe a couple of more I can’t think of now. Radical cutbacks in NSA/military outlays.

    • If you think our military/NSA/VA has preserved our freedoms, then thank me and other taxpayers and productive citizens and businesses.

      You’re so ignorant, Benji. You’ve never spent a moment in uniform so you don’t know what you don’t know. Whatever small chunk of change you’ve paid in is absolutely nothing compared to the sacrifices of military life.

      “Thank you.” Pffftttt.

  6. Great article. I would really like to post it on LinkedIn but the feed is not translating there. I only get the website header…

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